Top 5: Electrification & Low Carbon Fuels Can Reduce GHGs in the EU by 85%

Hello friends! Here’s my monthly take on the five most interesting developments in future fuels and vehicles trends. Items I selected include:

A Ricardo report prepared for Concawe in the EU shows three different scenarios to deliver 85% GHG emission reductions from the light-duty sector and suggests more GHG reductions will be achieved faster and at less cost with a mix of electrification and low carbon fuels.

A San Francisco County report has found that Uber and Lyft were responsible for approximately 50% of the rise in congestion in the city between 2010 and 2016.

The IEA says in its Renewables 2018 report that biofuel production continues to increase, rising 15% to 165 billion liters by 2023 and electric mobility will expand as well.

U.S. cities and states are doing all kinds of things on autonomous mobility.

An op-ed from Margo Oge suggests that the rest of the world will leave the U.S. behind on fuel economy. I provide a snapshot of what that actually looks like.

BEV Mass Rollout: A mass roll-out of battery (BEVs), representing a fully electrified market by 2040 and 90% of the EU fleet a decade later;

Low Carbon Fuels + Electrification: A focus instead on the development of low carbon fuels, including both biofuels and artificially synthesized eFuels, alongside some electrification (47%); and

PHEV + Bio & eFuels: Greater use of plug-in hybrid electric vehicles (PHEVs) (64% by 2050) together with increased use of bio- and eFuels.

The figure below shows the specific powertrain-fuel combinations to reach the 85% reduction for the three scenarios.

Source: Ricardo, October 2018

Among a number of findings, the BEV Mass Rollout scenario will be pricey with charging and network infrastructure projected at an annual €30-40 billion by 2040, and a cumulative cost of circa €630-830 billion by 2050 compared with €326-389 billion for the low carbon fuels scenario. The BEV Mass Rollout could lead to tax revenue losses of up to €66 billion by 2050. It would also require demand for lithium at about 200 kilotonnes and require 15 gigafactories to supply batteries for the EU EV market by 2050. Electricity demand from EV charging in 2050 in the managed home charging scenario is ~550 TWh, representing ~17.5% of the EU’s 2015 electricity generation, and is twice that required in the Low Carbon Fuels scenario.

According to Ricardo, both scenarios showed similar levels of overall total end-user cost reduction – total purchase price, fuel, operational and infrastructure costs – compared with the reference “business-as-usual” case, after adjusting for the need to recover these otherwise lost annual fiscal revenues.

2. San Francisco County Transit Authority: TNCs and Congestion ― This report analyzed how Uber and Lyft have affected road congestion in San Francisco, the third most congested city in the U.S., according to INRIX. The country found that both companies accounted for approximately 50% of the rise in congestion in the city between 2010 and 2016, as indicated by three congestion measures: vehicle hours of delay, vehicle miles travelled, and average speeds. Collectively, Uber and Lyft accounted for:

51% of the increase in daily vehicle hours of delay between 2010 and 2016;

47% of the increase in vehicle miles travelled during that same time period; and

55% of the average speed decline on roadways during that same time period.

On an absolute basis, they comprise an estimated 25% of total vehicle congestion (as measured by vehicle hours of delay) citywide and 36% of delay in the downtown core.

They also caused the greatest increases in congestion in the densest parts of the city ― up to 73% in the downtown financial district ― and along many of the city’s busiest corridors.

What is the county going to do about it? A solution proposed is a per-trip tax to help mitigate the impact of the trips they say, something I don’t think will go over well with drivers or passengers.

3. IEA: Renewables 2018: Transport ― For those who may not have seen the report or the transport-related portions of the report, this extract provides a great summary and graphics on ethanol, biodiesel and advanced biofuels, as well as renewable electricity. According to IEA, of the three sectors, power, heat and transport, transport has the lowest penetration of renewables at about 3.4%. That will grow to 3.8% by 2023. Still, biofuel production continues to increase, rising 15% to 165 billion liters by the end of the forecast, and still hold an almost 90% share of total renewables in 2023, even though electric mobility expands rapidly. Fuel ethanol makes up two-thirds of biofuel production growth, and biodiesel and hydrotreated vegetable oil (HVO) provide the remainder.

IEA expects renewable electricity in transport increase by two-thirds. Electric cars, two- and three- wheelers, and buses lead this growth; their electricity consumption almost triples over the forecast period. However, rail still accounts for most of renewable consumption in 2023. Overall, by the end of the forecast period, renewables provide almost one-third of the global demand for electrified transport, shown in the figure below.

IEA’s main case forecast expects annual production of novel advanced biofuels to reach 1.4 billion liters (0.9 Mtoe) in 2023, a more than threefold increase from estimated 2017 production, shown in the figure below. This is a downward revision from last year’s forecast, reflecting the small number of announced projects that are currently moving into construction. Over three-quarters of the announced advanced biofuel plants and those under construction that are using less mature technologies are located in Europe, India and the United States.

4. Route Fifty: Most Big Cities Are Planning for Autonomous Vehicles ― A lot more is happening with autonomy in U.S. states and cities than might be expected. More than half of the largest U.S. cities are preparing for autonomous vehicles in their long-range transportation plans—up from less than 10% three years ago, according to a new National League of Cities (NLC) report. Moreover, between 2011 and 2017, 22 states passed 46 bills, and five governors signed executive orders related to AV development and use with most permitting pilot projects. The NLC reports that a second wave is underway with 28 states introducing 98 bills in 2018.

5. Forbes: Can California Be The U.S. Auto Industry’s New Best Friend? ― Margo Oge, former head of EPA’s Office of Transportation and Air Quality (OTAQ), argues in this op-ed that rolling back fuel economy standards could cost domestic auto manufacturers their competitiveness in more than 40% of the U.S. auto market and some of the biggest foreign auto markets. She notes:

“It may seem ironic to expect economic upside from stricter regulations, but on fuel economy standards, California could be the auto industry’s new best friend… Beyond increasing emissions, Trump’s fuel economy rollback will also diminish the global competitiveness of domestic car companies, the very group Trump says he’s trying to help. Automakers’ best chance to avoid falling behind the rest of the world lies in a new partnership with California, which has led the nation with its stringent vehicle standards, and which 12 other states and Washington D.C. follow.”

With respect to the rest of the world, she has a point. I created this map recently for Future Fuel Outlook members to show how quickly the world is moving on light-duty fuel economy.

Honorable Mentions

It’s all over the media at this point that the U.S., worried about price spikes around the presidential election season, along with several flag nations (Panama, Liberia and the Marshall Islands) are pushing within the IMO to delay implementation of the 2020 sulfur cap regulations by implementing some kind of grace period or soft rollout. According to the Wall Street Journal, IMO representatives were “baffled” by the move, and the Marine Protection Environment Committee (MEPC) within the IMO rejected such a move yesterday. I see a bigger issue that not a lot of people are talking about and that’s whether the sulfur cap could be impacted by the IMO’s pledge to cut carbon emissions by 50% from shipping by 2050. Future Fuel Outlook members can read about that pledge and what it could mean here.

Finally, as the trilogue negotiation to finalize the light-duty fuel economy standard proposal in the EU continues, the Parliament has now backed a 35% CO2 reduction target for heavy-duty vehicles. I will be writing about this for the members next week, completing a package of reports looking at global light- and heavy-duty fuel economy policies.